Grazia Ietto-Gillies. Transnational Corporations and International Production: Concepts, Theories and Effects. Cheltenham: Edward Elgar, 2005.

252S. ISBN 978-1-84542-462-6.

Reviewed by Christoph Drrenbcher
Published on H-Soz-u-Kult (May, 2006)

G. I.-Gillies: Transnational Corporations and International Production

Transnational corporations are some of the most
complex and hence most intriguing organisations in the
modern world. Their organisational differentiation and
geographical spread contribute to their complexity; in
fact, some corporations cover the majority of countries
in the world. Moreover, transnational corporations and
their activities are subject to highly divergent assessments. While some people consider transnational corporations as a powerful force for the good The Economist,
January 29, 2000. , others hold a more critical view of
corporations that span nation states, economic systems,
cultures, and religions. Adding a colourful history of
centuries of cross-border business activity undertaken
by transnational corporations and their antecedents (medieval trade guilds, colonial trading companies and early
joint stock companies), it is no surprise that transnational corporations have attracted considerable academic
interest. The last fifty years, in particular, have seen
a real boom in attempts to explain the nature und behaviour of transnational corporations, international production, and cross-border management. According to
Ietto-Gillies (p. xii), this is a classical situation in which
there emerges a demand for a textbook that summarizes
and presents in relatively simple form the main elements
contained in various pieces of research. Thus, presenting summaries of all the main theories on transnational
corporations and international production is one basic
aim of the book. However, unlike other textbooks, her
book further aims to provide insight into the effects and
impacts of transnational corporations activities in several domains.

The book is divided into three parts. The first contains a short discussion of basic concepts, such as: What
is foreign direct investment and international production? ; it further relates the activities of transnational
corporations to other forms of cross-border business activities. Together with a brief summary of the historical evolution of transnational corporations, the first part
provides a good orientation and preparation for the second part of the book on theories, explaining transnational corporations and international production. Part
Two, which covers about half of the book, summarises
13 different theoretical approaches in two subsections:
one on pre-World War II approaches (dealing with Marxist and neoclassical approaches) and one on modern
theories. Within the subsections on modern theories,
theories are presented chronologically to allow for linkages between the specific theory and historical circumstances as well as to trace the effects of older theories
on newer ones. The subsection starts with the seminal works of Stephen Hymers, whose 1960 dissertation
opened the still ongoing theoretical discussions about
foreign direct investments and MNCs. The following
chapters deal with the product life cycle theory, the theory of oligopolitistic reaction, the currency areas theory,
the internalisation theory, the eclectic paradigm for international production, the learning theory of FDI, and
the technological accumulation theory. Separate chapters are also devoted to new trade theory approaches to
explain transnational corporations activities, the theory
of transnational monopoly capitalism, the intertwining
of nation states regulatory regimes, and transnational
corporations strategic behaviour. The individual chap1

H-Net Reviews

ters provide separate descriptions and discussions of the

individual theories. The third and final part of the book
deals with the effects of the activities of transnational
corporations and international production. In addition to
a methodological chapter, separate chapters are devoted
to the corresponding effects on performance, labour, and
international trade as well as on the balance of payments.

structurally equivalent examples are given to explain the

difference between stock and flow data.

The selection of the theories and effects discussed

is plausible, even though the author refrains from including more recent and hence emergent schools of
thought. It is somewhat surprising that the section on nation states and transnational corporations strategic beThe book is a concise and indicative source that famil- haviour does not mention the strongly growing instituiarises the reader with theoretical developments on the tionalist writings on transnational corporations associsubject of transnational corporations and international ated with names such as M. Geppert, T. Kostova, P.H.
production. It is written from an economics perspective Kristensen, G. Morgan, W. Ruigrok, R. van Tulder, R.
rather then from a management perspective. Theories Sally, R. Whitley, E. Westney and many others.
are presented in an easily understandable way, and conAdditionally, the author fails to give either a more
siderable space is devoted to comments and critical resynthesised view of the different theories or an outlook
marks on the theories presented. Moreover, the book follows a didactic approach that among other things materi- on theoretical perspectives. A synopsis of the main isalises in introductory chapters and methodological con- sues would be very helpful to compare, classify andlast
siderations as well as in the frequent inclusion of boxes but not leastto internalise the different approaches. Fiand summary sections. However, the boxes, in particu- nally, going through this very knowledgeable presentation and discussion of the different theories and the diflar fall behind in quality compared to the text. Sometimes
ferent effects, the reader would definitely benefit from
the information given in the boxes is too scarce to be useful (for instance in box 2.3). At other times, the informa- a brief summary of theory evolution and, perhaps, from
tion in boxes is redundant. In box 2.4, for instance, three the authors thoughts on the theoretical perspectives.
If there is additional discussion of this review, you may access it through the network, at:
http://hsozkult.geschichte.hu-berlin.de/
Citation: Christoph Drrenbcher. Review of Ietto-Gillies, Grazia, Transnational Corporations and International Production: Concepts, Theories and Effects. H-Soz-u-Kult, H-Net Reviews. May, 2006.
URL: http://www.h-net.org/reviews/showrev.php?id=19984
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